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Alpha-DAO

Alpha DAO Proposal #24

Updated: Jul 30, 2024
Published: Jul 26, 2022
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Alpha-DAO is a new Decentralized Autonomous Organization created by seasoned crypto researchers.

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Disclaimer: This is not investment nor investment advice. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

The information made available in this report is NOT for replication. The purpose is to share the thought process behind the DAO’s decision-making. Additionally, this is a HIGH-RISK journey for the DAO which means capital has also been allocated in accordance with this. Once again, DO NOT REPLICATE.
Status: Voted and executed ✅

Asset: BTC

Proposal: Short BTC by buying a put option.

Thesis:

The market is incredibly uncertain at the moment and seems to be getting over excited with the idea of things starting to move back in a positive direction. This is likely the typical crypto markets overreacting to news, and it is likely the Fed will re-iterate in their meeting on Wednesday that inflation is the key, and we are nowhere near the end. With that in mind, I’m proposing shorting BTC by buying a 1-week put option, expiring next Tuesday. On Arbitrum Premia, because of the excited market, put options for BTC are selling almost 15% below the rest of the market, meaning we can pick up a 1 BTC put expiring on the 2nd August for $1,062.65, with a breakeven on $20,937.35.

This is not simply a play on the uncertainty of the market, but also a hedge against further downside in the short term due to the Wednesday Fed meeting, and Thursday GDP figures. With these events, it is unlikely we don’t see some volatile price action, and it would make sense to protect ourselves if is negative.

Strategy:

Voting period is 24 hours, as this is a time-sensitive proposal.

Upon successful passing of vote, we will use for of the stablecoin in the DAO to transfer to Arbitrum and purchase the option on Premia. 24 hours after expiry, Premia options are auto exercised, so we don’t need to worry about exercising before or losing profits (as is the case with some other protocols).

Execution is subject to the price of the option remaining the same, should it increase, this would have to be signed off by DAO members.

Execution:

Proposal has been executed ✅
The DAO purchased a 1 WBTC Put on Premia/Arbitrum:
 
Strike Price: $21,000
Expiration: 02/08/2022
Premium: 930 DAI

Final Status:

BTC pumped above our strike price, and the 930 DAI premium was lost. As mentioned, this proposal was to hedge against risk, and as a result of the pump and Alpha DAO proposal 23, we are selling assets at higher price, so this lost premium will be offset by that.

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